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Prisoner’s dilemma: Difference between revisions
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{{prisonersdilemmatable}} | {{prisonersdilemmatable}} | ||
An exercise in calculating economic outcomes by means of {{tag|metaphor}}. | An exercise in calculating economic outcomes by means of {{tag|metaphor}}, the prisoners dilemma was developed at the RAND corporation in the 1950s by those splendid brainboxes as a way of predicting individuals’ behaviour in situations requiring [[I believe|trust]] among strangers - for very good example, when unacquainted participants buy or sell in an unregulated market. This field developed into [[game theory]]. | ||
===The original dilemma=== | |||
Two people are charged with a conspiracy<ref>Whether or not they are guilty is beside the point. If it helps you empathise with their predicament, assume they’re innocent</ref>. Each is held separately. They cannot communicate. There is enough evidence to convict both on a lesser charge, but not the main charge. Each prisoner is separately offered the same plea bargain. The offer is: | Two people are charged with a conspiracy<ref>Whether or not they are guilty is beside the point. If it helps you empathise with their predicament, assume they’re innocent</ref>. Each is held separately. They cannot communicate. There is enough evidence to convict both on a lesser charge, but not the main charge. Each prisoner is separately offered the same plea bargain. The offer is: | ||
*If A informs B but B refuses to inform on A: | *If A informs B but B refuses to inform on A: | ||
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**B will get 1 year in prison (on the lesser charge). | **B will get 1 year in prison (on the lesser charge). | ||
The | ===The eBayer’s dilemma]]=== | ||
The consequence is easier to see in more familiar context. Strangers consider a settling a transaction they have agreed on eBay to purchase a set of complete boxeed set of the final season of ''Some Mothers Do ’Ave ’Em'' on VHS, for £100. The seller must pay and the buyer must post the videos simultaneously. Assume the Seller would have sold the videos at any price over £50 (so the transaction represents a £50 profit for her), and privately, the buyer would have been prepared to pay £150, (the transaction therefore representing a £50 profit for him). | |||
When settling the transaction, each has the following risks: | |||
*If the seller posts ''and'' the buyer pays: | |||
**The seller will get £100 but will lose a video it values a £50 (+£50). | |||
**the seller will get a video it values at £150 but must pay £100 (+50) | |||
*If the seller posts, but the buyer does not pay: | |||
**The buyer will have video it values at £150 for free (+£150) | |||
**The seller has given away a video it values a £50 for nothing (-£50). | |||
*If the buyer pays but the seller does not post: | |||
**The buyer will have paid £100 for nothing (-£100) | |||
**The seller will receive £150 and will still have the video it values a £50 (+£200). | |||
*If the seller does not post ''and'' the buyer does not pay: | |||
**The seller is in its original position (£0). | |||
**The buyer is in its original position (£0). | |||
===[[single round prisoner’s dilemma]]=== | ===[[single round prisoner’s dilemma]]=== | ||